Delivering differentiated innovation: what Australia can learn from Israel

“Necessity is the mother of innovation” is the phrase I heard most frequently during my time in Israel. Israel is becoming home to the global R&D centres of more than 300 multinational corporations, and attracting more than $4.8bn in venture capital funding in 2016.

So how did Israel triumph in the high tech innovation space?

The Israeli Defence Force is the original ‘innovation hub’

The IDF is more than a military force – it is the nation’s largest innovation hub and the foundation of its high tech expertise. The IDF enables the flow of high tech talent from schools, into the military and then out into the industry. The IDF’s investment in its people and the development of superior, high tech solutions drives the economy where cross pollination from defence into other sectors enables talent to spread, innovative thinking to be shared, and meaningful collaboration to transpire.

Culture is deeply entrenched in the innovation process

The Israeli mindset prioritises education and encourages risk taking – on reputation, time and money – in pursuit of a better life. Being a small country with a high cost of living, people are always striving for more. With the highly publicised success of many Israeli start-ups, a large portion of the population have tried their hand at entrepreneurialism or aspire to do so.

Our innovation ecosystems are facing (or have faced) the same challenges

The Australian ecosystem may be less mature than Israel’s but the challenges we have faced along the way are the same: a shortage of STEM qualified resources in the workforce; the need for more collaboration between industry and the academia/research sector; and difficulty attracting the right investors to support a growing number of start-ups. These challenges are not easily resolved, but the opportunity for greater Israel-Australia collaboration exists, and by leveraging each other’s experience, we may move faster towards resolution.

How do we move to cement Australia’s position as a truly innovative nation on the global stage?

We need to get the recipe right. For the ecosystem to operate effectively, we need all the players in the ecosystem to be active and present. Government, academia, industry, investors, and advisors – we all need to understand our roles and how we need to interact and support each other to generate the meaningful outcomes. There is role here for organisations such as KPMG, enabling more effective engagement between researchers and industry/entrepreneurs, and supporting the translation of R&D investment into economic impact.

We need to tackle real problems. Commercialisation is easier and more lucrative when innovation delivers a solution to an established problem. This requires ecosystem participants to come together in a coordinated way, communicating continuously, to ensure those attempting to solve the problem truly understand it.

We need to be more encouraging of one another, celebrating success and failure. The whole ecosystem stands to benefit when we support each other more, sharing lessons learned, experiences and networks more freely. The more Australian ‘good news stories’ we generate, the greater global attention we attract, and the more likely investors are to look seriously at Australian capability.

We must differentiate ourselves from other innovative nations, and build a brand of innovation that is uniquely Australian. The key to Australia’s innovation success is finding what differentiates us from other global economies, channelling R&D investment in that direction and telling the world in a deliberate and coordinated way what Australia is leading the world in. We can build our own brand of innovation based on sport, food, agriculture, the land as these things are deeply aligned with the Australian psyche. It is the cornerstone of the ecosystem’s success, intimately intertwined with culture, history and way of life.

It is the role of government to set the climate for success, but it is the responsibility of industry to come together and deliver economic outcomes. Australia has the ability to be world leader in these domains – we should leverage the experience of Israel and other innovative nations as we pursue it.

Millie Keating is an Associate Director based in Melbourne, and a member of the Operations Advisory and Defence teams. Earlier this year, while her brother, an Australian Army Officer was on deployment in Israel with the United Nations in Israel, she combined her annual leave with a ‘quick look’ study tour. Alongside Gilad Nass from KPMG Israel’s Innovation team, Millie’s mission was to understand the Israeli innovation story and the drivers behind its global success.

Hi Millie, do you implicitly include the Defence Department (and all its Services and Groups) in your definition of “Government” in your first recommendation? The latent opportunity for Australia (and Defence) is for the totality of Government to actively, energetically and enthusiastically pursue development of Industry as a Fundamental Input to Capability.

Hi Tony, thanks for your question. I do include all parts of the Department of Defence in the Government definition – Defence is well placed to identify and invest in innovation and to drive this agenda. But as you note, an element of this is ensuring that Industry as a FIC is understood throughout the ecosystem and the levers and opportunities this creates are accessible.

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